PPL Corp Q2 FY2024 earnings call

Financial Results & Highlights

• Reported second quarter GAAP earnings of $0.26 per share; adjusting for special items, earnings from ongoing operations were $0.38 per share.
• Reaffirmed 2024 ongoing earnings forecast of $1.63 to $1.75 per share, expecting to achieve midpoint.

Utility of the Future Strategy

• Aim to deliver net zero energy system by 2050 while keeping it reliable and affordable. Focus on improving grid reliability/resiliency via design, automation, AI, smart grid, and cybersecurity; transitioning to clean energy mix with dispatchable gas, renewables, and R&D for low-carbon tech; driving efficiencies to keep energy affordable, using AI for further efficiencies.

Infrastructure & Projects

• On track to complete $3.1B in infrastructure improvements in 2024. Exiting transition service agreements with National Grid, integrating Rhode Island Energy. Achieving O&M savings targets of $120M-$130M in 2024 and $175M by 2026.

Data Center Support

• Pennsylvania positioned to support large-scale data centers with advanced transmission network; Kentucky for midsized data centers with land, lower energy prices, and tax incentives. Rate designs protect customers from undue burdens related to data center connections.

In the second quarter, the Kentucky segment results increased by $0.05 per share compared to Q2 2023, driven by higher sales volumes and lower operating costs. The Pennsylvania Regulated segment results increased by $0.05 per share, due to higher transmission revenues and sales volumes. The Rhode Island segment results increased by $0.01 per share, primarily from higher distribution and transmission revenue and interest income, partially offset by higher operating costs and property taxes. Corporate and other decreased by $0.02 per share primarily due to higher interest expense.

• Reaffirmed 2024 ongoing earnings forecast of $1.63 to $1.75 per share, expecting midpoint.
• Projected 6%-8% annual EPS and dividend growth to at least 2027.
• $14.3B in infrastructure improvements from 2024-2027.
• On track to complete $3.1B in infrastructure in 2024, exit transition service agreements with National Grid, integrate Rhode Island Energy, and achieve O&M savings targets.

Q: Shar Pourreza on transmission and PJM auction results A: Vince discusses PJM auction implications, need for transmission and generation investments, advocating for legislative change to address resource adequacy concerns Q: Durgesh Chopra on PJM auction impact on customer bills and balance sheet A: Vince talks about near-term bill impact from capacity prices, Joe discusses balance sheet strength and FFO to debt range Q: David Arcaro on Kentucky IRP and gas plant build time A: Vince discusses Kentucky IRP process, gas plant build time (18-24 months for peakers, 4-5 years for combined cycle), O&M opportunities beyond 2026 Q: Julien Dumoulin-Smith on data center cost savings and predictive failure tech A: Vince talks data center cost savings timeline, Joe on rate case timing for predictive failure tech recovery Q: Ryan Levine on data center timetable and Pennsylvania CapEx A: Vince on data center go/no-go timeline around end of year/beginning of next year, CapEx scaling with project-specific estimates Q: Anthony Crowdell on PJM capacity prices and hedging A: Vince on PJM capacity prices impact, hedging strategies to mitigate energy price volatility for customers